It's the former, but from what I read in the article, a shady version of that is my take.
The computer basically appeared to randomise a high number of people to kill based on a very shallow dataset, weak data linking and a high desire to kill people who are Palestinian.
It's hard to read the details from the Guardian article and think of it as anything other than a randomised Israeli state murder machine. I can't envisage it being accurate to a point any reasonable person would accept it be used against someone they know, in any circumstances.
That it targeted 10's of thousands is utterly horrifying. That it was involved in any actual battleground scenario makes me think those involved in it's creation and sale are culpable.